ALABAMA JOBS ACT

A REPORT TO THE 2017

BY THE

JOINT LEGISLATIVE ADVISORY COMMITTEE ON ECONOMIC INCENTIVES

Representative Alan Baker, Chairman Senator , Vice Chairman

President Pro Tem Del Marsh Speaker Mac McCutcheon Senator Tripp Pittman Representative Steve Clouse Senator Representative Kelvin Lawrence Senator Phil Williams Representative Bill Poole Commerce Secretary Greg Canfield – (Consultant) Joint Legislative Advisory Committee on Economic Incentives

Jobs Act Report -2017

Mr. Greg Canfield presented to the Committee on Tuesday, January 23, 2018. Mr. Canfield

stated that the data in his presentation is from July 2015 through December 2017. These numbers

do not reflect the recent Toyota-Mazda announcement.

Under the Alabama Jobs Act, the State has closed projects in 33 of Alabama’s 67 counties and

has offered projects in 49 counties. It was pointed out that the counties that have not had any

projects offered have some challenges not always presented in other counties. Mr. Canfield stated that a lack of local incentives would certainly be a part of any assessment on these counties. These counties are all “targeted” counties which includes additional incentives. Mr.

Canfield noted that some of these counties are limited by a small population which restricts the size of projects.

The largest project that has been awarded to a targeted county has created 222 jobs in Bibb

County. In total, the Alabama Jobs act has created 718 jobs in the targeted counties with capital investment totaling $398.5 million for these counties. While there are some great successes here, it was admitted that we still have work to do for these targeted counties.

From projects recruited under the Alabama Jobs Act there is currently estimated a $424 million net return on investment in the next 10 years. It is estimated that there will be a $1.3 billion net return on investment over the next 20 years.

There has also been a great deal of growth in tier 2 and tier 3 automotive suppliers. It is expected that there will be more growth with the recent announcement of the Toyota-Mazda plant. There

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have also been 8 projects awarded throughout the state that are “foundational targets.”

Foundational targets are those that tend to support other targeted sectors, but occasionally are stand-alone.

In addition, the jobs created under this act have an average hourly wage that is 35% higher than the Alabama median wage.

It should also be noted that the Alabama Jobs Act was revised during the 2017 regular session.

The original Jobs Act had a total cap of $850 million. The incentives were quickly approaching that cap due to the success of the program. The update in 2017 provides for an annualized cap of

$300 million. This revised cap provides that in any year, the obligations of the state offered incentives cannot exceed $300 million. At no point can the annualized balance of outstanding

Jobs Act incentives exceed the cap unless approved by the legislature. In other words, the grand total of incentives that the State is committed to divided by the number of years those incentives are to be paid out cannot exceed $300 million. Mr. Canfield stated that it is currently too early to tell what impact the new annual cap might have on the program.

The Alabama Jobs Act is currently set to expire on December 31, 2020, unless reauthorized by the Legislature. This will not impact projects that already have agreements in place at that point in time, but will prevent any new projects from being agreed to unless the legislature reauthorizes the Act.

Included with this report, as provided by the Department of Commerce to the Committee, are two data summary sheets.

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